Correlation Between Coca Cola and CNL Capital

Can any of the company-specific risk be diversified away by investing in both Coca Cola and CNL Capital at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Coca Cola and CNL Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Coca Cola HBC AG and CNL Capital EKES AIFM, you can compare the effects of market volatilities on Coca Cola and CNL Capital and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Coca Cola with a short position of CNL Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and CNL Capital.

Diversification Opportunities for Coca Cola and CNL Capital

-0.62

Correlation Coefficient

Coca Cola  CNL Capital

Excellent diversification

The 3 months correlation between Coca and CNL is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Coca Cola HBC AG and CNL Capital EKES AIFM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNL Capital EKES and Coca Cola is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Coca Cola HBC AG are associated (or correlated) with CNL Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNL Capital EKES has no effect on the direction of Coca Cola i.e., Coca Cola and CNL Capital go up and down completely randomly.

Pair Corralation between Coca Cola and CNL Capital

Assuming the 90 days trading horizon Coca Cola HBC AG is expected to generate 2.01 times more return on investment than CNL Capital. However, Coca Cola is 2.01 times more volatile than CNL Capital EKES AIFM. It trades about 0.27 of its potential returns per unit of risk. CNL Capital EKES AIFM is currently generating about -0.06 per unit of risk. If you would invest  3,288  in Coca Cola HBC AG on December 29, 2024 and sell it today you would earn a total of  918.00  from holding Coca Cola HBC AG or generate 27.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Coca Cola HBC AG  vs.  CNL Capital EKES AIFM

Coca Cola HBC

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Coca Cola HBC AG are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Coca Cola unveiled solid returns over the last few months and may actually be approaching a breakup point.

CNL Capital EKES

Risk-Adjusted Performance

Very Weak

Over the last 90 days CNL Capital EKES AIFM has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong essential indicators, CNL Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Coca Cola and CNL Capital

The main advantage of trading using opposite Coca Cola and CNL Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola position performs unexpectedly, CNL Capital can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in CNL Capital will offset losses from the drop in CNL Capital's long position.

The idea behind Coca Cola HBC AG and CNL Capital EKES AIFM pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.